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Move to New Zealand. Pay zero tax. No joke.
New tax laws big coup for internet businesses
Artful




msg:3247059
 12:52 am on Feb 9, 2007 (gmt 0)

I just heard that the New Zealand government is allowing 4 year tax exemptions from all foreign income for people who come to NZ for the first time to live. New Zealand is a *real* country (i.e. not some flaky tax haven) with full services, anti-war policy and beautiful environment. So if you have an internet business deriving income from outside NZ, you pay ZERO tax on it and the government loves you. I'm not kidding.

I am not associated with the NZ government or with anybody that would gain from this. I just have been told about this and thought others here might like to know.

Read more here on the NZ Tax Dept website: [ird.govt.nz...]

 

walkman




msg:3247103
 2:07 am on Feb 9, 2007 (gmt 0)

for 4 years tax free. And after that...pay 60%?

Plus, US citizens are screwed anywhere they go, moon included. They must pay taxes to IRS on all income.

Artful




msg:3247178
 4:20 am on Feb 9, 2007 (gmt 0)

I think the top personal rate is 39% in New Zealand.

axgrindr




msg:3247196
 5:01 am on Feb 9, 2007 (gmt 0)

Wouldn't you still have to pay tax in the States (or wherever you're from) on that income?

You would still be a US citizen after moving to New Zealand (it takes three to four years to become an NZ citizen) and you would still be responsible for filing in the US as far as I know.

New Zealand is a *real* country

As an American who just moved from New Zealand after having lived there for over 6 years I would say this point is debatable.

Artful




msg:3247211
 5:33 am on Feb 9, 2007 (gmt 0)

As an American who just moved from New Zealand after having lived there for over 6 years I would say this point is debatable.

What's wrong with it?

Yes and I think if you are a US citizen, you miss out because you are taxed on your worldwide income. I think most of the rest of the world are taxed on the basis of residence and not citizenship though. e.g. Australia, UK, Canada etc.

[edited by: Artful at 5:58 am (utc) on Feb. 9, 2007]

axgrindr




msg:3247227
 6:08 am on Feb 9, 2007 (gmt 0)

full services

True, the IT infrastructure is pretty good.
Cost of living is very low which is good.

But try and get a good meal in a restaurant and you'd be out of luck. If you would like some sort of good service with that meal you are really out of luck.

Any equipment you might have to buy would be very expensive as it all imported, nothing is made in New Zealand except lamb (which is still really expensive there for some reason) and some nice wine.

I could go on about the lack of conveniences in NZ but to sum it up at times I felt like I was living in a third world country.

anti-war policy

This is because they have no air force or navy and a perfunctory army. They rely on Australia and the US for any protection they might need and as a country with so many natural resources it stands to reason that they will eventually need some protection.

beautiful environment

Yes, the scenery is beautiful. It is awesome.
But remember this is a *sub*-tropic country. You would not be moving Fiji.
NZ is situated just above Antarctica and it gets much of it's tempurature from there.
It is cold, rainy and very windy. The weather can be simply atrocious and it seems to be getting worse.
The sound of gale force winds has been a constant in our lives for 6 years.

These are my personal opinions. Many of my friends loved it there and bought houses and are staying for good.

We moved to Spain.

[edited by: axgrindr at 6:11 am (utc) on Feb. 9, 2007]

Artful




msg:3247232
 6:11 am on Feb 9, 2007 (gmt 0)

Where in NZ did you live? Sounds like you lived in the South Island. Auckland and north of Auckland are apparently not like that.

[edited by: Artful at 6:14 am (utc) on Feb. 9, 2007]

axgrindr




msg:3247245
 6:26 am on Feb 9, 2007 (gmt 0)

I lived in Wellington, the capital of New Zealand, which is at the bottom of the North island.

You're right though, Auckland does have less wind.

axgrindr




msg:3247319
 9:57 am on Feb 9, 2007 (gmt 0)

I think most of the rest of the world are taxed on the basis of residence and not citizenship though. e.g. Australia, UK, Canada etc.

Since this law is for your foreign income only moving to New Zealand doesn't mean that your country of origin will no longer want the tax it is owed on your income in that country.

For example: If you have an income earning property in the UK and you move to New Zealand the UK will certainly still want the tax you owe on the income you made from that property.

The same goes for an internet business you may be running in the UK. If you move to NZ and keep your business running in the UK the UK will still want the tax it is owed.
As soon as you move that internet business to NZ and start shipping from there it is no longer considered foreign income.

I'd suggest looking into the double taxation agreements that all of these countries have with New Zealand before you pack everything up and move to Wanganui.

callivert




msg:3247622
 4:07 pm on Feb 9, 2007 (gmt 0)

The United States is the only developed country that taxes its citizens on worldwide income, wherever they live. Even if you're not a citizen but you have a green card, the rule applies: wherever you live in the world, you must pay American tax on top of any local taxes.
However, in practice, it often doesn't happen, because many countries have tax treaties with America to avoid this problem. A tax treaty is basically an agreement that American citizens don't have to pay double tax while they're living in the host country.
New Zealand has a tax treaty with America. Therefore, there are no hidden traps in the deal IMO.
Disclaimer: I'm neither a lawyer nor an accountant.

axgrindr




msg:3247880
 7:51 pm on Feb 9, 2007 (gmt 0)

New Zealand has a tax treaty with America. Therefore, there are no hidden traps in the deal IMO.

New Zealand has a double taxation agreement (not a tax treaty) with the United States as well as with many other countries.
The double taxation agreement means you have to file in both countries but if there is a difference, say your US tax was greater than your NZ tax, you would have to pay the difference to the US.
Canada and the UK have this same agreement with New Zealand.
I am no accountant or lawyer either but I have been paying taxes in New Zealand and in the US for over 6 years and am very familiar with the requirements.
I can almost guarantee you that NZ is not a tax haven for internet businesses.

Durham_e




msg:3247897
 8:04 pm on Feb 9, 2007 (gmt 0)

Incidently it's lovely in Wellington right now with a gentle zephyr of 15 Knots from the South. So what if people sometimes have to rope the kids together when they go out to play. It hard to be on an island miles or ks away from "First" world smog and not have changeable dramatic weather.

2oddSox




msg:3247917
 8:15 pm on Feb 9, 2007 (gmt 0)

As an American who just moved from New Zealand after having lived there for over 6 years I would say this point is debatable.

Good riddance.

maccas




msg:3247925
 8:27 pm on Feb 9, 2007 (gmt 0)

Tut tut axgrindr, didn't you know you can't critise New Zealand?

gopi




msg:3247943
 8:47 pm on Feb 9, 2007 (gmt 0)

I beleive same kind of tax holiday is in UK also, not sure of the details though. I read somewhere thats the reason many of the worlds billionaires like Laxmi Mittal shifted their domicile to london.

j_h_maccann




msg:3248017
 10:08 pm on Feb 9, 2007 (gmt 0)

tax holiday is in UK also, not sure of the details

The standard arrangement in the UK is that if you are "resident" in the UK but not "domiciled" in the UK, you will not pay taxes on any foreign-source income. If you remit current income to pay your living expenses in the UK you will be taxed, but not if you live off income earned in prior years before becoming resident.

The standard tax planning to take advantage of the UK situation is to set aside large capital sums unmixed with income (e.g., in an offshore bank account with all further interest credited to a second offshore bank account) in a tax year prior to moving to the UK. That capital sum can be transferred to the UK and used for living in the UK free of UK income taxes (you pay local council taxes, VAT, automobile tax, petrol tax, etc.). You can also buy (with your existing capital) and sell your principal residence in the UK without significant taxes.

If your income is in low-tax jurisdictions, then it can grow and compound in off-shore investments without UK taxes. Even for Americans, the deal isn't bad: the US will want to tax all income of Americans regardless of source, but the UK will not tax any of it a second time.

There are various standard manipulations (closing old accounts and opening new ones) to establish additional sources of income as earned outside the UK prior to the current tax year, so UK income taxes can in practise be readily avoided. This can go on for about twenty years before the Inland Revenue begins to think that maybe the taxpayer should be "domiciled" in the UK. At that point, more elaborate tax planning involving trusts is required.

All of this has been true for many years, starting well before the Blair years. When Labour first came in there was speculation that the basis of taxation for non-domiciled long-term residents would change, but in the last dozen years the government has said several times that any change would drive from London many tycoons who are important to the UK economy.

Artful




msg:3248069
 11:03 pm on Feb 9, 2007 (gmt 0)

The difference between NZ and UK in terms of the tax arrangements is, if you run an internet business while in the UK, the income is not tax exempt - the income you earn needs to be completely passive income not requiring your input in order for you to get the tax exemption. As I understand however, any foreign business income that is not earnt through personal services, will be eligible for the tax exemption in NZ - hence allowing internet businesses built on affiliate marketing, ecommerce etc.

Artful




msg:3248073
 11:08 pm on Feb 9, 2007 (gmt 0)

I am no accountant or lawyer either but I have been paying taxes in New Zealand and in the US for over 6 years and am very familiar with the requirements.
I can almost guarantee you that NZ is not a tax haven for internet businesses.

Yes but you entered the country before April 1, 2006. The exemption is new and only applies for those entering NZ after this time. Check the link I posted. It is real and it works for many common forms of internet businesses. BTW I have now talked to NZ tax laywers and they confirm it is real provided the income is not derived from personal services (e.g. consulting, giving SEO advice, web design for others etc). If you want to name of the firm I talked to, message me - they are well-known.

[edited by: Artful at 11:17 pm (utc) on Feb. 9, 2007]

axgrindr




msg:3248137
 12:26 am on Feb 10, 2007 (gmt 0)

Good riddance.

Sorry, didn't mean to be so harsh on NZ. It is a truly beautiful country, it is safe, it is a great place to raise a family, it's got a great health care system and the seafood is awesome.

The NZ weather was just "a bit fresh" for this Hollywood boy though.

Good luck with the move Artful.

2oddSox




msg:3248144
 12:42 am on Feb 10, 2007 (gmt 0)

Sorry, didn't mean to be so harsh on NZ...

Nicely disarmed. In return, great website you have.

Durham_e




msg:3248942
 1:37 am on Feb 11, 2007 (gmt 0)

Gee axgrindr I didn't think you were harsh.

You never even mentioned the EARTHQUAKES!

Artful




msg:3248952
 2:05 am on Feb 11, 2007 (gmt 0)

and the seafood is awesome

Visiting Wellington soon. Umm can you tell us where to get good seafood there? Cheers.

Durham_e




msg:3249484
 9:48 pm on Feb 11, 2007 (gmt 0)

Artful,

the vote here is for the Fish de jour at the CAPITOLE - Next to the Emabassy Theatre at the end of Courtenay Place.

maccas




msg:3249487
 9:59 pm on Feb 11, 2007 (gmt 0)

Bah I am homesick now! Fresh crayfish, green lipped mussels, paua and snapper.

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